Let's go to know the cost of software production

The cost of software production

At first, let us get some idea of the scale of software costs in the world. In the USA It is estimated that about $500 billion are spent each year manufacturing software. This amounts to 1% of the gross national product. The estimated figure for the world is that $1,000 billion is spent each year on software production. These figures are set to rise about 15% each year. The operating system that IBM developed for one of its major range of computers (called OS 360) is estimated to have cost $200 million. In the USA, the software costs of the manned space program were $1 billion between 1960
and 1970. These examples indicate that the amount spent on software in the industrialized nations is of significant proportions.

Programmer productivity

The cost of software is determined largely by the productivity of the programmers and the salaries that they are paid. Perhaps surprisingly, the productivity of the average programmer is only about 10–20 programming language statements per day. To the layperson, a productivity of 20 lines of code per day may well seem foul. However, this is an average figure that should be qualified in two ways. First, enormous differences between individual programmers – factors of 20 – have been found research. Second, the software type makes a difference: applications software can be written more quickly than systems software. Also, this apparently poor performance does not just reflect the time taken to carry out coding, but also includes the time required to carry out clarifying the problem specification, software design, coding, testing and documentation. Therefore, the software engineer is involved in many more tasks than just coding. However, what is interesting is that the above figure for productivity is independent of the programming language used – it is similar whether a low-level language is used or a high-level language is used. It is therefore more difficult than it initially appears to attribute the level of productivity to laziness, poor tools or inadequate methods.

Hardware versus software cost 

The comparative costs of hardware and software can be a lively field for controversy. In the early days of computers, hardware was costly and software relatively cheap. Nowadays, thanks to mass production and miniaturization, hardware is cheap and software (labor intensive) is expensive. So the costs of hardware and software have been reversed. These changes are reflected in the so-called “S-shaped curve”, Figure 1.2, showing the comparative costs as they have changed over the years. Whereas, in about 1955, software cost typically only about 10% of a project, it has now escalated to 90%, with the hardware comprising only 10%. These ratio of should be treated carefully. They hold for certain projects only and not in each and every moment. In fact, figures of this kind are derived largely from one-off large-scale projects. We will now look at a number of issues that affect the popular perception of software and its costs.